ILA strike may lead to a cargo spike

Monday, January 14, 2013

Retailers are expected to ship heavier quantities of cargo through the nation's ports in January to beat a possible strike by longshoremen at East and Gulf coast ports. The International Longshoremen's Association and management are trying to negotiate a new contract to replace the one that expires Feb. 6.
Import cargo volume at the nation’s major retail container ports is expected to increase 2.3 percent in January over the same month last year, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.
"The strike deadline came and went at the end of December, but the threat of closing down nearly half our nation’s port capacity has only been postponed, not eliminated,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “The uncertainty of what will happen in February has retailers implementing expensive contingency plans yet again and is a burden our economy cannot afford.”
The latest extension of contract talks between the ILA and U.S. Maritime Alliance comes after previous strike deadlines in September and October. The union and management are scheduled to meet this week under the supervision of federal mediators, but the ILA walked away from local talks affecting the Ports of New York and New Jersey earlier last week. A strike would close 14 ports from Maine to Texas where nearly 15,000 dockworkers handle 40 percent of the nation’s ocean cargo.
U.S. ports followed by Global Port Tracker handled 1.25 million TEUs in November, the latest month for which after-the-fact numbers are available. With most holiday merchandise already in the country, that was down 8.6 percent from October, and down 2.8 percent from November 2011.
December was estimated at 1.3 million TEUs, up 6.5 percent from last year.
Hackett Associates Founder Ben Hackett said there were signs that retailers brought merchandise into the country early as the ILA’s Dec. 29 strike deadline approached.
“We have seen a rise in the level of the retail inventory-to-sales ratio,” Hackett said. “This may be a reflection of importers stocking up ahead of the East Coast/Gulf coast port strike that was expected, though the run-up came well ahead of that.”
Global Port Tracker, which is produced for NRF by Hackett Associates, covers the U.S. ports of Long Angeles, Long Beach, Oakland, Seattle, Tacoma, New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades, Miami and Houston.
Cherry Wang, a container derivatives broker at GFI Group in London, noted that cargo volumes were expected to surge in late December and January as retailers and other shippers try to move goods out of China prior to the Chinese New Year on Feb. 10 because many manufacturing plants shut down for a couple of weeks during the Spring Festival. - Chris Dupin